Ken Griffin’s Citadel LLC is once again a leading investment vehicle in the hedge fund industry, after struggling badly during the financial crisis of 2008. In fact, financial risk management magazine Risk Magazine recently awarded the Chicago-based Citadel with the title “Hedge Fund of the Year”, praising the firm’s success in deploying talent and technology to manage risk. The investment powerhouse Citadel was founded by Griffin back in 1990 with the backing of influential hedgie Frank Meyer. The firm’s investment approach focuses on in-depth fundamental research and extensive quantitative analysis, which have been essential for its spectacular performance delivered over the past several years. Citadel LLC’s multi-strategy fund Wellington gained 14.4% in 2015, outperforming peers and broader market benchmarks by a wide margin. However, our data show that Citadel’s 1,840 long positions in companies with market caps of at least $1 billion lost 3.9% last year. With that in mind, let’s proceed with the discussion of Ken Griffin’s largest equity holdings as of the end of the fourth quarter.
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#5 Schlumberger Limited. (NYSE:SLB)
-Shares Owned by Citadel LLC (as of December 31): 5.51 Million
-Value of Citadel LLC’s Holding (as of December 31): $384.20 Million
Citadel LLC cut its stake in Schlumberger Limited. (NYSE:SLB) by a whopping 2.99 million shares or 35% during the final quarter of 2015, ending the year with 5.51 million shares. The shares of the supplier of technology, integrated project management and information solutions to the oil and gas industry are down nearly 21% over the past one-year period, so Ken Griffin and his team might have decided to cut exposure to the depressed and struggling sector. In August 2015, Schlumberger and Cameron International Corporation (NYSE:CAM), a manufacturer of oil and gas pressure control and separation equipment, announced an agreement, under the terms of which Cameron will merge with a wholly-owned subsidiary of Schlumberger. As a result, each shareholder of Cameron will receive 0.716 shares of Schlumberger and $14.44 in cash for each Cameron share owned. In the meantime, the falling customer spending in the oil and gas industry severely impacted the company’s financial performance last year, with its 2015 revenues declining 27% year-on-year to $35.5 billion. The sustained decline in oil prices has forced oil companies to curb spending, which in turn triggered a wave of consolidation among service providers. Ken Fisher’s Fisher Asset Management reported owning 4.23 million shares of Schlumberger Limited. (NYSE:SLB) through its 13F for the fourth quarter.
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#4 Pioneer Natural Resources (NYSE:PXD)
-Shares Owned by Citadel LLC (as of December 31): 5.51 Million
-Value of Citadel LLC’s Holding (as of December 31): $384.20 Million
The Chicago-based hedge fund was mildly bullish on Pioneer Natural Resources (NYSE:PXD) during the October-December period, as the fund upped its position in the company by 70,813 shares. The U.S.-focused independent oil and gas exploration and production company has seen its shares decline by 26% over the past 12-month period, due to depressed commodity prices. Just recently, the company announced its plans to reduce horizontal drilling activity by 50% to 12 rigs through mid-2016, but its 2016 production is anticipated to increase by at least 10% despite a lower rig count. Pioneer plans to close down its six rigs in the Eagle Ford Shale play, along with an additional six rigs in other locations. Meanwhile, Pioneer’s capital budget for 2016 totals $2.0 billion, which is down from the $2.2 billion spent last year and lower than the previously-anticipated range of $2.4 billion to $2.6 billion. The capital budget is anticipated to be funded from estimated cash flow amounting to $1.3 billion, assuming average prices of $36.00 per barrel for oil and $2.35 per thousand cubic feet for gas, cash on hand, and proceeds from the sale of the Eagle Ford Shale midstream business. Seth Klarman’s Baupost Group sold out its entire stake of 4.14 million shares in Pioneer Natural Resources (NYSE:PXD) during the fourth quarter.
